What’s keeping your CEO up at night? Well, over-regulation, terrorism, geopolitical uncertainty, cyber threats and availability of key skills, in a nutshell. That’s according to PwC’s 2018 CEO Survey.
The annual survey of CEOs – now in its 21st year – is the largest of its kind, and has become a reliable barometer of the top issues and threats that CEOs are concerned about right now.
With close to 1,300 CEOs from 85 countries across a range of sectors taking part in this year’s survey, the findings are a must-read for any HR or People leader wanting to understand what’s on the mind of their C-suite executives this year.
We’ve extracted the most relevant areas of concern for CEOs where we believe HR and People leaders can play a part in supporting them to address and meet these challenges.
1. Short-term organizational growth
CEOs’ levels of confidence for revenue growth over the next 12 months within their own organizations differed from region to region. North American CEOs have never been surer of their companies’ near-term growth prospects, with 53% very confident.
Latin-America and Asia-Pacific followed closely with 45% and 44% of their CEOs very confident of growth in 2018, while Western Europe was more cautiously optimistic with 38% of CEOs very confident.
Asked what will drive this growth in 2018, virtually all North American CEOs cited organic growth (94%), followed by new M&A (61%) and cost reduction (59%).
Of note is North American CEOs’ reliance on mergers and acquisitions as compared with the rest of the world – 45% of Western Europe CEOs ranked it as a growth driver, while the global average was 42%.
HR’s role: effective staffing strategies and using People Science is vital
Understanding the areas of growth the business is targeting this year and how rapid this growth is predicted to be will enable HR and People leaders to ensure the business has the right people in the right roles to support organizational growth. This is where an effective staffing strategy plays a vital role.
Also crucial for this is using analytics and People Science to get real actionable insight on where the pain points may be from a skills and resourcing perspective, so you can plan accordingly in advance.
HR’s role in organizational design for shaping the future of a business is a hot topic at the moment. A study by Bersin by Deloitte has identified a connection between the best-performing HR organizations and their level of expertise in developing teams.
2. Mid and long-term growth and geopolitical uncertainty
CEOs are more cautious this year than last when it comes to confidence about their own three-year prospects, with 46% somewhat confident (in 2017 this was 41%) and 45% very confident (in 2017 this was 51%).
PwC says it may simply be harder for CEOs to see beyond the near term, particularly against the backdrop of so much happening in political arenas the world over.
In fact, geopolitical uncertainty has increased to an extreme concern for 40% of this year’s CEOs, compared to 31% of CEOs last year.
Interestingly, over 50% of CEOs in this year’s survey have been in office for less than five years, meaning they have never led their current company through a serious downturn.
The global economy has been in recovery for eight years and CEOs are discerning enough to consider the possibility that a downturn might be on the longer-term horizon and are placing their bets accordingly, says PwC.
HR’s role: boosting productivity
Firstly, ensure you have a long-term staffing strategy in place that includes provisions for an economic downturn, perhaps reviewing the mix of full-time, part-time, contract staff and freelancers the company currently has.
Boosting productivity, however, is also a vital component of getting the most out of your organization – something that should be top of the agenda when considering mid to long term growth.
Over a third of employees admitted they’re productive for less than 30 hours a week in a recent study we conducted with over 3,500 workers. That’s a whole day each week that they’re in work, but not working. Overall, this low productivity is costing the US a staggering $450 – $550 billion a year.
The answer, our research found, lies in workforce experiences. 92% of employees said this is important to them.
Consider how you’re building a workforce experience that your people really value, which in turn engages them and boosts productivity. This will be different for each employee, but our research found several common themes which were important to many employees, including flexible and remote working, supporting worker wellbeing and showing employees you value and recognize them.
Over-regulation was the top concern for CEOs globally, with 42% ‘extremely concerned’ (the same number as last year), and it ranked as the top five concerns in every region surveyed; so whilst the level of concern may not have heightened year-on-year, over-regulation remains a top area of worry for business-leaders.
Be it regulations around pensions, over-time, pay equality, data protection or financial reporting, there are a myriad of regulations that businesses, small and large, must comply with, so unless there’s a universal regulatory reform, this is likely to be a key concern for your CEO.
HR’s role in compliance
Stay on top of impending regulations that may have an impact on the way your business manages its people and data, such as GDPR coming into force on 25th May 2018 – there’s a lot HR and People leaders can do to prepare and ensure that their house is in order regarding people data.
Also ensure your processes and procedures around payroll and employees’ pension and tax contributions are water-tight so any requests for reports from the CEO around these can be easily produced.
Finally, also consider making it as smooth as possible for the onboarding of new recruits at a time when there may be increased rules and regulations around employment.
Proactively communicating this across the c-suite and to your CEO means your leadership team knows this area is covered.
4. Terrorism and cyber threats
The level of ‘extreme concern’ regarding terrorism has more than doubled this year with CEOs globally citing it as their number two concern (it was 12th last year). Over 40% of CEOs reported being extremely concerned about terrorism this year compared to 20% last year.
Cyber threats have also become a key concern moving from 10th place up to 4th place this year, with 40% of CEOs extremely concerned about cyber-attacks.
It’s interesting to note that threats such as these are increasingly causing CEOs more concern in 2018 than direct business risks such as changing consumer behaviour or new market entrants.
Do HR teams have the right procedures in place?
With a heightened risk of terrorist incidents, it is advisable for companies to have a policy in place to manage, assess and protect their employees from a terrorist threat.
Things to consider include: do you have plans to search your site to deal effectively with either bomb threats or for secreted threat items, and are your staff familiar with those plans? Do you have a person and vehicle, search and screening policy and plan that you can implement should there be a threat increase?
With cyber-attacks becoming more sophisticated it is also essential that your people data is adequately protected and secure.
5. Availability of key skills
38% of CEOs said that they are extremely concerned about the availability of key skills.
With the speed of digital transformation and emerging technologies like AI, CEOs are concerned that they won’t have the right set of skills amongst their people.
The war for talent’s raging – and HR leaders are feeling it too
Essentially the availability of key skills is one of the biggest concerns for HR and People leaders too. That’s what we found when we surveyed over 500 HR and People leaders on the challenges they’re facing.
A staggering 84% of HR leaders we spoke to said they’re struggling to recruit the right talent, and a whopping 70% explained they have issues keeping their high performers. We also found that fast-growth companies were coping with this better than those which weren’t scaling as quickly.
Building great workforce experiences, and a culture where your people feel valued was the solution, according to our research. However, whilst 55% of senior executives we spoke to thought that they were a ‘People Company’, only 29% of employees agreed. So there’s a lot of room for progress here.
HR and People leaders can lead the way in their organization by creating great experiences that attract – and keep – the best, helping your CEO to sleep more soundly at night. If you want to discover how far your organization is towards becoming a People Company, try our online tool, which tells you your company’s profile and where you are on your journey.
6. Changes in technology
The speed of technological change is a key concern for 38% of CEOs globally. Anxiety centres around the impending promise and perils of artificial intelligence (AI) in the workplace.
PwC is predicting that AI will contribute an additional US$15.7 trillion to global GDP by 2030, but those that cannot rise to its challenges in time will get left behind – so it’s no surprise this is keeping CEOs up at night.
In HR, automation is one thing organizations should be considering
Digital transformation has already been taking place in the HR sector with a range of technology speeding up and improving traditional HR functions.
Progressive organizations are using automation to not only free up HR teams’ time from admin to concentrate on building great workforce experiences for their people, but to create a better and more intuitive experience for their people – enabling things like self-service and more flexible team management.
Again, this is something we found in our survey of over 500 HR leaders as more common in high-growth organizations; 80% of fast-growth companies had embraced automation, versus 54% in lower growth businesses.
These progressive organizations should continue to embrace automation and new technologies to build better experiences for their people, demonstrating its value to CEOs, so that they can rest easy knowing the company is using technology to scale the business.
If you’re not embracing automation and other new technologies in your business, consider the role it can play and perhaps it’s time to start looking at the value of using this in your organization.
Sweet dreams are made a breeze?
Companies that put people first get ahead. They attract the best, and as a result, their business flourishes because they invest in their biggest opportunity for growth – their people. We call companies which do this ‘People Companies’.
Interestingly, these high-growth progressive companies that are doing this are also those which are embracing new technologies, taking the war for talent seriously, and play a key role in planning for organizational growth.
HR and People leaders who are firmly placing their people and how they design great experiences for them at the top of the agenda will be easing the minds of CEOs awake at night over some of these concerns.
Ultimately, helping your CEO to embrace emerging technology, rise to the challenges surrounding new regulations such as GDPR, and matching the right talent to the right roles for the future needs of the company, are going to help your business leaders sleep soundly at night.
Is it time to put your CEO’s worries to bed?
Find out more about how fast-growth companies are changing their HR and People practices to get ahead – and whether their concerns align to CEOs’ – by downloading our research from 500+ HR leaders.